Friday, January 03, 2014

Quartz article: Is China going to be #1?

In my new Quartz article, I play the amateur historian. The topic is whether China is destined to be the world's preeminent country. I've been meaning to take on this meme for a while, and finally got around to it. Here are some excerpts:

China’s awe-inspiring rise is often framed as the return to a historical norm. A common belief is that for most of the last 5,000 years, China was the world’s center of wealth, culture, technology, and power. The 19th and 20th centuries, we are told, were a brief aberration, and China is now simply retaking its rightful place as the world’s preeminent nation. This trope gives China a certain air of inevitability.

The problem is, it’s not really accurate.

The truth is that for most of its history, China has struggled to overcome a number of chronic difficulties that have usually kept it from global preeminence...

China has always been one of the world’s leading civilizations over the last five millennia. But it has only held both economic and military preeminence for brief periods of time—the late 1300s and 1400s being the most notable. Why has China not been preeminent for longer stretches? History is not a science, but we can make some guesses. The very thing that makes China so powerful and important–its titanic size–also endows it with fundamental weaknesses...

In other words, China is vulnerable now for the same reason it was vulnerable in ages past. History is not a tale of Chinese preeminence, but a tale of Chinese oscillation. The same thing that often kept China from realizing its potential as the world’s dominant nation—its tremendous, unwieldy size—means that although it will surpass the US in total GDP, its supremacy may well be short-lived and incomplete.

15 comments:

China has abused its resources beginning with its people then all the natural resources and its environment. Communist philosophy is simply that a person is a resource of the state; and, can be disposed for the betterment of the state. Except, the state is controlled by a few thugs, and it is the betterment of these thugs. Otherwise, how could you explain the rise of billionaires in communist China? By the way, Chinese culture also pride in giving respect (similar to Japan) while subjecting its people to working 70~80 hours per week, living four deep in a room without any privacy or hygiene facilities...

There will be Chinese spring more than likely violent like the Arab spring.

As always, you write intelligently and persuasively. However, I think that there is another factor at least as important as size.

I am referring to the climate of northern China. The loess-covered lands of the Yellow River basin are potentially highly productive, but this potential is often not realized because of ENSO-related dry-cold periods, sometimes lasting for many decades. These periods caused famines killing millions, right into the 20th century. The climate there has been agriculturally unreliable for millenia, long before the dawn of even China's recorded history.

You note that China's prosperity waxed when it assimilated the 'rich South". Another way of putting it is that China prospered once it acquired lands that produced a reliable surplus capable of succoring the North. The periods when the North was unusually well-watered coincided with the periods of China's greatest prosperity; the periods when dry spells were unusually frequent and prolonged corresponded with civil war and weakness (and invasion, yes; the invaders were also affected - and perhaps motivated - by these global shifts in climate.)

I don't want to sound overly deterministic; after all, the period you identify as the dawn of Europe's rise coincides roughly with the Little Ice Age. But I do believe there has been a significant contribution by climate to the course of China's history.

What about the future? Does this change your conclusion that "this time is different"? Will improvements in transportation and overall agricultural productivity make the agricultural contribution of the North irrelevant? I don't know. The North could be compared loosely to the American midwest, which undergoes similar oscillations. Modern technology has obviated the dependency on dry farming there, but only at the expense of an unsustainable draining of groundwater reserves. Either another source of water must be found, or else the available water must be used more efficiently. Time will tell whether either possibility eventuates.

There is an account in James Fallows, “China Airborne” where visiting Chinese officials are at a reception on the banks of the Potomac watching airplanes coming in to Dullas with the White House not far away. They were shocked at the proximity. Air space and flight plans in China are tightly controlled. Helicopters were discouraged because they have no flight plans and many thousands died in the earth quake a few years ago because of their lack of helicopters for rescues. It’s the same problem they have with the Internet – control. It’s hard to imagine this bias for control being overcome to the detriment of innovation no matter how many trig students they produce. Their fatal flaw.

Will China be the first country to truly understand that demand can't accurately be determined without a market? Maybe? Probably not though.

The Canadian government has mandated cable unbundling. They'll probably unbundle themselves next. It will be embarrassing when Canada spanks us because they allow their citizens to pick and choose which public goods they spend their taxes on.

Of course I'll blame you. Why? Because you never wrote a single post about the significance of the opportunity cost concept! You're like the poster boy for why physics majors should never become economists.

There's no economic term for step 2. That's probably not your fault. Is it my fault? I guess. Why? Because I studied International Development Studies. I studied why China got beat by the Asian Tigers. I learned why all the efforts of "developed" countries to help developing countries failed so miserably.

Resources can't be efficiently allocated if they aren't allowed to freely flow in the most valuable directions. And the value of any given direction can't be determined without knowing the true values of citizens. And true value can only be determined when each and every individual has the freedom to decide between having their cake and eating it (opportunity cost).

Unbundling public services will run into the same problems that philanthropy-reliant public services do/would (everyone wants the "John Doe Foundation Theater" and no one wants the "John Doe Foundation Water Treatment Plant" so we end up with a dozen theaters and hot and cold running sewage) combined with the popular misunderstanding of where government spending actually goes (in the States see the surveys where we see people wanting to balance the budget by cutting the 25% they have decided that we spend on Foreign Aid but this is not solely a US phenomenon.)

Do you mean to imply that China before 1800s has always been oscillating among the top 3 and in the future, its size will limit it to be number 1, but certainly possible to be No. 2 or 3? For many Chinese, returning to No. 1 is not necessarily the goal, but to be the top 3/or top 10 is likely a goal. Because the last 200 years China certainly is not in top 3, or even top 30, but more like bottom 30.

So to set China up as if it wants to be No. 1 and only No. 1 is a bit disingenuous and putting your own view on what China wants in the future, not necessarily what Chinese really want.